This January marked the beginning of the 114th Congress. A new congressional session means new legislation, as all legislation introduced but not approved by both legislative chambers in the previous session, to include the 2013 Marketplace Fairness Act, are not carried forward into the new session. Champions of the Marketplace Fairness Act are wasting no time in building momentum on this effort in 2014.
In March a bipartisan group of Senators – Senators Enzi (R-WY), Alexander (R-TN), Durbin (D-IL) and Heitkamp (D-ND) – introduced the Marketplace Fairness Act of 2015 (S 698), legislation that is virtually identical to legislation of the same name overwhelmingly approved by the Senate by a 69-27 vote in 2013. The bill would allow those states interested in collecting taxes from online retailers to either: (1) join the Streamlined Sales and Use Tax Agreement (SSUTA), a compact between 24 states to use simplified state-level administration of sales and use taxes and uniformity in state and local tax bases and definitions, or (2) agree to implement minimum tax simplification requirements as outlined in the bill. GFOA is urging members to utilize the draft advocacy resources below to contact their Senators and request their cosponsorship of this important legislation.
Meanwhile in January House Judiciary Committee Chairman Bob Goodlatte (R-VA), who has been adamantly opposed to considering the Senate’s 2013 Marketplace Fairness Act, circulated draft legislation designed to enable state and local governments to collect taxes from internet sales. The legislation, dubbed the Online Sales Simplification Act, offers an alternative approach to the Marketplace Fairness Act by proposing an origin-based sourcing sales tax collection and redistribution structure, as opposed to the destination-based sourcing structure of the Marketplace Fairness Act. The GFOA has some serious concerns with this proposal, which you can review here, and we are working closely with our colleagues at the National League of Cities, U.S. Conference of Mayors, National Association of Counties and National Governors Association, along with our partners in the retail community, to urge Chairman Goodlatte to consider moving forward with a destination-based sourcing bill instead of an origin-based sourcing bill. Additional draft House destination-based internet sales tax legislation is also being circulated by Congressman Jason Chaffetz (R-UT), which the GFOA supports.
As congressional discussions continue on these legislative proposals, the GFOA will continue to keep you informed on the status of these discussions and continue to encourage you to engage your members of Congress directly to urge their support for the Marketplace Fairness Act using the resources below.
What Can You Do To Help Pass the Marketplace Fairness Act?
The GFOA has developed a suite of advocacy materials for our members to use for this advocacy effort, including:
- A report on the impact of marketplace fairness on a sample of cities
- Data on the total uncollected sales tax in 2012 in each state.
- Contact information for your members of Congress
Why is this legislation necessary?
Consumer failure to pay online sales and use taxes as a result of federal inaction on this issue annually results in the loss of billions of dollars per year in taxes owed to state and local governments on remote sales. For example, according to the Department of Commerce, e-commerce sales in 2005 were $87 billion, and grew by nearly 40 percent to $225.5 billion in 2012. Correspondingly, the National Conference of State Legislatures revealed last year that these sales produced approximately $23 billion in unpaid sales and use taxes in 2012.
Passing The Marketplace Fairness Act would finally bring federal law into the digital age by enabling state and local governments to collect sales taxes on online purchases that are already owed to them but are not being paid, as well as level the playing field for brick and mortar retailers who are currently at a five to ten percent competitive disadvantage to remote sellers because Congress has failed to act to update national tax laws with respect to digital sales.